NCLT Kolkata (16.12.2021) in Bank of Baroda & Anr. Vs. Kilburn Chemicals Limited [IA (IB) No. 571/KB/2021 and I.A. (IB) No. 789/KB/2021 in C.P. (IB) No. 764/KB/2020 ] discussed in detail, the steps taken by the RP & compliances of the provisions of the Code & Regulations while considering the Resolution plan for approval.
Excerpts of the Order;
# 2. IA (IB) No. 571/KB/2021 is an application under section 30 (6) of the Code after approval of the resolution plan by the Committee of Creditors (“CoC”).
# 3. This Application was moved on 26.11.2021 by Mr. Rishav Banerjee, Advocate on behalf of Mr. Sanjai Kumar Gupta, Resolution Professional of Kilburn Chemicals Limited (CIN: L24117WB1990PLC199409) by invoking the provisions of section 30 (6) of the Insolvency and Bankruptcy Code, 2016 (“the Code” or “IBC”) read with regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulation”) for approval of a Resolution Plan in respect of Kilburn Chemicals Limited.
# 4. The underlying Company Petition in CP (IB) No. 764/KB/2020 was jointly filed by Bank of Baroda and State Bank of India against Kilburn Chemicals Limited, (“Corporate Debtor”), under section 7 of the Insolvency and Bankruptcy Code 2016 which was admitted vide order
dated 10 August 2020 in CP (IB) No. 764/KB/2020. 5. Initially, Mr. Partha Pratim Ghosh (IBBI Reg. No. [IBBI/IPA-001/IPP00554/ 2017-2018/10984]) was appointed as the Interim Resolution Professional and was later confirmed as the Resolution Professional (“RP”) by the CoC. However, Mr. Partha Pratim Ghosh was replaced by the Applicant as the RP of the Company, vide order dated 04.11.2020.
# 6. Mr. Partha Pratim Ghosh, the IRP made public announcement on 13.08.2020 in Financial Express (English), AajKal (Bengali) and Divya Bhaskar (Marathi Edition, Gujarat) newspapers regarding initiation of Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) and called for proof of claims from the financial and operational creditors, workers and employees of the Company in the specified forms till 24.08.2020.
# 7. The Applicant states he received claims from 2 (two) Secured financial creditors, 281 (Two Hundred and Eighty One) operational creditors, workmen and employee dues and 7 (Seven) related party claims.
# 8. The Committee of Creditors (“CoC”) was constituted on 01.09.2020 with 2 (two) Secured financial creditors, i.e., State Bank of India and Bank of Baroda, having 49.88% and 50.12% of voting right in CoC, respectively.(Annexure C – Report certifying the Constitution of CoC,)
# 9. The applicant states that a total of 21 (Twenty-One) CoC meetings have been held during the CIRP Period
# 10. The Applicant submits that in terms of the provisions of section 25(2)(h) of the Code read with regulation 36A(1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, invitations in Form ‘G’2 for Expressions of Interest ( “EoI”) from potential resolution applicants were issued. Form ‘G’ was published on 21.10.2020 for submission of resolution plans for the Corporate Debtor. The last date for receipt of EOIs was 05.11.2020. This was published in Business Standard (English), AajKal (Bengali) and Western Times (Gujarati). The notice was also published on the website of the Insolvency and Bankruptcy Board of India (“IBBI”).
# 11. The applicant submits that the last date for receipt of EoIs, as per Form G, was extended from time to time and was last extended till 20.01.2021, by that date 6 (Six) plans were received by the Applicant3. Subsequently, on 25.01.2021 in 9th CoC meeting all the 6 (Six) sealed Resolution Plans were opened in the presence of the CoC members (present physically) and respective Potential Resolution Applicants (“PRA”) (Present through audio video means)4. The List of the PRAs who have submitted the Resolution Plans are as under:
(i) Meghmani Organics Limited
(ii) Rescom Mineral Trading FZE
(iii) KLJ Resources Ltd
(iv) DCM Shriram Industries Ltd
(v) Inland Power Ltd.
(vi) Kiri Industries Limited
Further, in the 9th CoC meeting it was also noticed by the RP that one of the PRA, i.e., Kiri Industries Limited has not given the Bank Guarantee with the plan and they were requested to submit the Bank Guarantee or to remit the equivalent amount in the bank account of the Corporate Debtor by the end of the day, failing which the plan submitted by the PRA will not be considered and it will be disqualified5.
# 12. In the 10th, 11th, 12th, 13th, 14th, 15th, 16th & 18th CoC meetings, presentations were made by the Resolution Applicants and RP on the Resolution Plans, the Financial Proposals stated thereunder and details about the Plan. Detailed discussion on the plans also took place.
# 13. Subsequently, in 20th CoC meeting, held on 13.05.2021 and 17.05.2021, the Applicant informed the CoC along with other attendees that the Compliance Report of four of the PRAs (i.e., Inland Power Ltd., Meghmani Organics Limited, Rescom Mineral Trading FZE, United Arab Emirates (Lead)(Trimex Industries Private Limited) and KLJ Resources Limited) have been shared with them through email and the applicant has also evaluated the Plans as per the RFRP and Evaluation Matrix and confirmed that the contents of the Resolution Plans submitted by Resolution Applicants met all the requirements as contained under section 30(2) of the Insolvency and Bankruptcy Code, 2016 and the CIRP Regulations and does not
contravene any of the provisions of law for the time being in force. The applicant also informed that the plan submitted by DCM Shriram Industries Limited is non-Compliant.
# 14. Thereafter, all the 4 (four) Resolution Plans were put up for voting by electronic method. The voting was kept open from 11:00 am on 20.05.2021 to 8:00 pm on 15.06.2021.
# 15. Further, the applicant states that after the voting had started at 11:00 am on 20.05.2021, 2 (two) PRAs, namely, Rescom Mineral Trading FZE & KLJ Resources Limited, wrote to the RP/CoC for revision of their financial plan. However, the issue was considered by the RP and the CoC in 21st CoC meeting, held on 11.06.2021, where it was unanimously decided by the CoC that such an opportunity should not be given because enough opportunity was given to all and the same would lead to delay and uncertainty in the CIRP process and the Resolution Plan submitted by Meghmani Organics Limited (“Resolution Applicant”) was approved by 100% voting percentage of the CoC.
# 16. The decision of the CoC was communicated by the Applicant to the Successful Resolution Applicant on 15.06.2021 vide email. The Applicant also issued the Letter of Intent on 16.06.2021 vide email dated 18.06.2021 and the same was accepted by the Successful Resolution Applicant on 18.06.2021 by endorsing its acceptance on the Letter of Intent. The Successful Resolution Applicant in accordance with Regulation 36B (4A) of the CIRP Regulation has also submitted the Performance Bank Guarantee on 19.06.20218 (Bank Guarantee No. 006GT02211700004 issued by HDFC Bank).
# 17. The CoC was informed of the fair market value and liquidation value of the Corporate Debtor, as per the valuation reports.
# 18. The amount proposed in the Resolution Plan are tabulated below:
# 19. The % of the recovery of all the stakeholders are as follows:-
# 20. The Applicant submits details of various compliances as envisaged within the Code and the CIRP Regulations which requires a Resolution Plan to adhere to, which is reproduced hereunder:
I. Submission of Resolution Plan in terms of Sub-section (2) of section 30 of the Code (as amended vide Amendment dated 16 August 2019):
II. Measures required for implementation of the Resolution Plan in terms of Regulation 37 of CIRP Regulations: A resolution plan shall provide for the measures, as may be necessary, for insolvency resolution of the corporate debtor for maximisation of value of its assets, including but not limited to the following: -
III. Mandatory contents of Resolution Plan in terms of Regulation 38 of CIRP Regulations:
IV. Mandatory contents of Resolution Plan in terms of Regulation 39 of CIRP Regulations
# 21. Applicant submits that the Successful Resolution Applicant has submitted a affidavit of eligibility under Section 29A of the Code, which has been annexed as [Annexure M] at pages 664 -666 of the Application.
# 22. Applicant submits that the RP has submitted the certificate certifying and confirming the eligibility of the SRA under Section 29A of the Code, which has been annexed as [Annexure H] at pages 565 -567 of the Application.
# 23. The Applicant has filed a compliance certificate in the prescribed form, i.e., Form ‘H’ in compliance with regulation 39(4) of the CIRP Regulations which has been annexed as Annexure N at Pages [667-673] with the Application.
Details of Resolution Plan/ Payment Schedule
# 24. The Applicant submits the relevant information with regard to the amount claimed, amount admitted and the amount proposed to be paid by the Successful Resolution Applicant i.e. Meghmani Organics Ltd, under the said Resolution Plan is tabulated as under:
Notes:
i) Contractual Claims and Liabilities (Clause 6.7. of Resolution Plan)
A. Contract with GAIL (Clause 6.7.3)
• The SRA understands that, in July 2016, KCL had entered into a Long-term Contract (10 years) for sourcing Natural Gas from Gas Authority of India Limited (“GAIL”), Ahmedabad Zonal Office, at a minimum level of consumption of 51000 standard cubic metres (scm) per day (“GAIL Contract”).
• Certain disputes arose with GAIL and KCL referred the matter to arbitration, which is currently pending. GAIL has continued to raise monthly and annual claims/ invoices against the GTA and the GSA.GAIL has filed a claim of INR 5,39,75,00,000 on the CD, which has been rejected by the RP (“GAIL Claim”).The SRA believes that the GAIL Contract is onerous
and commercially unviable and its continuation is not in the long-term interest of the CD. Further, since the SRA does not propose to use gas from GAIL for purpose of its revival, the
GAIL Contract is not required to be continued. Hence, as an integral part of this Resolution Plan, the GAIL Contract shall stand terminated on the NCLT Approval Date without the requirement of any further act or deed on the part of the SRA, SPV, KCL and/ or the new management.
• Any claims or liabilities against KCL, arising under the GAIL Contract, including GAIL Claim and any other contingent, unclaimed, disputed or undisputed, asserted or unasserted, present or future Claims of GAIL, including Claims in respect of termination of the GAIL Contract shall be settled by the CD at NIL value.
B. GIDC Lease (Clause 6.7.4)
• The SRA affirms that after the Closing Date, the CD shall make payment to GIDC under the GIDC Lease in accordance with the terms thereof.Further, the SRA / SPV/ CD shall make necessary applications with GIDC for registering change in control of the CD from erstwhile shareholders/ management to the SPV/SRA.The relevant transfer charges/ transfer premium will be paid to GIDC for such transfer. The SRA estimates the transfer charges/premium to be INR 18.00 Crores (Indian Rupees Eighteen Crores) and clarifies that this is over and above the payments to be made to the creditors under this Resolution Plan and payment of CIRP costs and in no way will impact implementation of the plan.
# 25. Details on Management/Implementation and Reliefs as per the Resolution Plan – Salient Features
Monitoring and Supervision (Clause 10.4)
a. An appropriate monitoring committee shall be constituted on the NCLT Approval Date (Monitoring Committee), which shall comprise of:
1. Resolution Professional
2. Two representatives as appointed by the SRA
3. Two representatives of the Financial Creditors
b. Resolution Professional shall act as the Chairman of the Monitoring Committee and shall hold office from the NCLT Approval Date till the Closing Date.
c. The Monitoring Committee shall convene its first meeting within 7 days of the NCLT Approval Date. All decisions of the Monitoring Committee shall be undertaken with unanimous consent until the Closing Date. After the NCLT Approval Date, RP/ Monitoring Committee shall run the Corporate Debtor in ordinary course, without undertaking or incurring any liabilities on behalf of the Corporate Debtor (except liabilities arising in ordinary course). The roles and responsibilities of the Monitoring Committee have been specified in the Resolution Plan.
Management and Control of KCL by SRA (Clause 9.1)
a. The SPV and its nominees proposes to hold 100% (hundred percent) shareholding in the restructured share capital of KCL, as elaborated in Chapter VIII (Change in Shareholding)
b. On and from the Closing Date, the SPV and the SRA shall be in control and management of affairs of the CD and the business of the CD shall be carried on by the new management as appointed by the SRA/ SPV. On the Closing Date, the board of directors of KCL shall stand reconstituted, wherein all existing directors shall be deemed to have vacated their offices and new directors will be appointed to the board of directors of KCL by the SRA/SPV.
c. Any approvals that may be required from Governmental Authorities (including tax authorities) in connection with the implementation of the Resolution Plan including on account of change in ownership / control of KCL shall be deemed to have been granted on the NCLT Approval Date. Where required, after Closing Date, the SRA/ SPV/ CD shall make necessary applications with Governmental Authorities (including GIDC) for registering change in control of the CD from erstwhile shareholders/ management to the SPV/SRA.
# 26. Reliefs and Concessions (Chapter XII of Resolution Plan)
I.A. (IB) No. 789/KB/2021
# 27. This is an application filed by GAIL (India) Limited under section 60(5) of the Insolvency and Bankruptcy Code, 2016 seeking for admission of it’s claim by the Resolution Professional of Kilburn Chemicals Limited (“Corporate Debtor”).
Findings
# 37. On hearing the submissions made by the Ld. Counsel for the Resolution Professional, Ld. Counsel for the Applicant in I.A. (IB) No. 789/KB/2021, learned Senior Counsel for the successful Resolution Applicant and learned Senior Counsel for the CoC and perused the record, we find that the Resolution Plan has been approved with 100%voting share. As per the CoC, the plan meets the requirement of being viable and feasible for revival of the Corporate Debtor. By and large, all the compliances have been done by the RP and the Resolution Applicant for making the plan effective after approval by this Bench. Further, in view of the above submissions made in I.A. (IB) No. 789/KB/2021, the I.A.becomes infructuous and is hereby dismissed.
# 38. Clause 6.7.3 given in pages 51-52 of the Resolution Plan wherein it is stated that
“Any claims or liabilities against KCL, arising under the GAIL contract, including GAIL claim and any other contingent, unclaimed, disputed or undisputed, asserted or unasserted, present or future claims of GAIL, including claims in respect of termination of the GAIL contract shall be settled by the Company at NIL value. No amount shall be payable by the Resolution Applicant, SPV, KCL and/or the new management of KCL to GAIL and neither of them shall, at any point, be made directly or indirectly responsible or liable for any claim that GAIL has or may have against KCL.”
is to be struck off and GAIL (India) Limited shall be paid along with the other Operational Creditors. The claim of GAIL (India) Limited shall be verified by the monitoring Committee.
# 39. On perusal of the documents on record, we are also satisfied that the Resolution Plan is in accordance with sections 30 and 31 of the IBC and also complies with regulations 38 and 39 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016.
# 40. The Corporate Debtor being a listed entity, the successful Resolution Applicant shall ensure compliance of applicable listing guidelines.
# 41. As far as the question of granting time to comply with the statutory obligations/seeking sanctions from governmental authorities is concerned, the Resolution Applicant is directed to do the same within one year as prescribed under section 31(4) of the Code.
# 42. In case of non-compliance of this order or withdrawal of Resolution Plan, the CoC shall forfeit the EMD amount already paid by the Resolution Applicant.
# 43. Subject to the observations made in this Order, the Resolution Plan in question is hereby approved by this Bench. The Resolution Plan shall form part of this Order.
# 44. The Resolution Plan is binding on the Corporate Debtor and other stakeholders involved so that revival of the Debtor Company shall come into force with immediate effect.
# 45. The Moratorium imposed under section 14 shall cease to have effect from the date of this order.
# 46. The Resolution Professional shall submit the records collected during the commencement of the proceedings to the Insolvency & Bankruptcy Board of India for the record and also unto the Resolution Applicant or New Promoters.
# 47. Certified copy of this Order be issued on demand to the concerned parties, upon due compliance.
# 48. Liberty is hereby granted for moving any Application if required in connection with implementation of this Resolution Plan.
# 49. A copy of this Order is to be submitted in the Office of the Registrar of Companies, West Bengal.
# 50. The Resolution Professional shall stand discharged from his duties with effect from the date of this Order.
# 51. The Resolution Professional is further directed to handover all records, premises/factories/documents to the Resolution Applicant to finalise the further line of action required for starting of the operation. The Resolution Applicant shall have access to all the records/premises/factories/documents through the Resolution Professional to finalise the further line of action required for starting of the operation.
# 52. I.A. (IB) No. 571/KB/2021, I.A. (IB) No. 789/KB/2021 and the main Company Petition i.e. CP(IB)No. 764/KB/2020 shall stand disposed of accordingly.
# 53. The Registry is directed to send e-mail copies of the order forthwith to all the parties and their Ld. Counsel for information and for taking necessary steps.
# 54. Certified copy of this order may be issued, if applied for, upon compliance of all requisite formalities.
# 55. File be consigned to the record.
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